Download presentation
Presentation is loading. Please wait.
Published byAlfred Hoover Modified over 8 years ago
1
C O N F I D E N T I A L | www.oliverwyman.com The Upside The 7 Strategies for Turning Big Threats Into Growth Breakthroughs October 27, 2010 Adrian Slywotzky
2
2 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Value Migration ® $ BB US Steel Nucor Sears Wal-Mart Compaq Dell Motorola Nokia
3
3 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com No profit zone: Airline industry example Industry Net Profit 1971-2008 Net Profit (1995 $BB) Source: Air Transport Association of America.
4
4 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Evolving no profit zones Airlines Consumer Electronics PCs Homeowner’s Insurance Cars Beverage in Grocery Films Agriculture Environmental Remediation Lots of Manufacturing
5
5 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Customer priorities trajectory 2005 Customer Priorities 1. 2. 3. 2010 Customer Priorities 1. 2. 3. 2013 Customer Priorities 1. 2. 3.
6
6 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Type 3 Type 1 Type 2 Convenience store Local grocer Large regional chains Convenience store Local grocer Large regional chains Convenience store Restaurants National chains Hotel chains Office buildings Local organizations Hotel chains Office buildings Local organizations Taste Price Availability BottlerGrocerFountainVendingConsumer Local franchise Regional Large, sophisticated, business- driven Coca-Cola: Multiple customer thinking
7
7 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Supplier Power Index Differentiated Moderately concentrated50/50 Unique Highly fragmented90/10 Pure commodityHighly concentrated10/90 Strongly differentiated Fragmented70/30 Weakly differentiated Concentrated30/70 ProductCustomers Suppliers/ Customers
8
8 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Profitability Market Share Chrysler Ford GM Automotive – 1970s
9
9 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Automotive – 1990 Chrysler Ford GM Market Share Profitability
10
10 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Automotive – 2002 Chrysler GM Profitability Market Share Ford
11
11 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Automotive – 2008 Chrysler Ford GM Profitability Market Share
12
12 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com No-Profit Zones Cars Consumer electronics Music Newspapers Grocery Telco networks
13
13 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com My business design Customer Selection Profit Model Strategic Control TodayNext Scope Unique Value Proposition
14
14 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Business Design Example: Airline Industry Within a particular industry, companies may pursue very different Business Designs UnitedSouthwest International & domestic; coach, business and first- class travelers Broad network & loyalty program Customer Selection & Value Proposition Domestic travelers; coach only Low-cost, no-frills w/ highly consistent customer service Tiered fares based on class, flexibility Ancillary revenues Value Capture/ Profit Model Every-day low prices High asset utilization Sophisticated IT International Sales & Regulatory capability Organizational Systems Cultural emphasis on Southwest way Global hub-and-spoke route system ScopeUS-only point-to-point route system Controlled-access airports in key geos Loyal frequent fliers Strategic ControlLowest costs High frequency route coverage Southwest Next? $10BB$16BBRevenue $4.7BBMarket Cap$10BB
15
15 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Industry Risk
16
16 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Compete/collaborate: Timing Industry profit margin Collaboration should begin Collaboration begins Change the compete/collaborate ratio soon enough to make a difference
17
17 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Compete/collaborate: Ratio Compete 100 90 80 70 60 50 Collaborate 0 10 20 30 40 50
18
18 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Compete/collaborate Too late? Textiles Apparel Steel DRAMs Consumer electronics Music Still in play? Utilities Cars Chemicals Hollywood Pharma Computing Aerospace Airlines?
19
19 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Current Economic Situation – A Short Recap
20
20 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com
21
21 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com
22
22 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com The Bermuda Triangle SavingsIncome Debt
23
23 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Total HH debt to total HH income Total HH debt includes: Mortgage debt, home equity debt, non-revolving consumer credit and revolving consumer credit. Source: Federal Reserve Board. 70% 113% 165%
24
24 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Percentage Source: Bureau of Economic Analysis Personal savings as a percent of disposable personal income
25
25 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Of the roughly 130 million jobs in the U.S., only 20 percent pay more than $60K a year, while the remaining 80 percent average $33K. >$60,000 a year $33,000 a year
26
26 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Average U.S. unemployment rate Source: United States Department of Labor, Bureau of Labor Statistics ?
27
27 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com The “Seven-Lean Years” Economy?
28
28 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Before reaching for the bottle of antidepressants … The tale of two economies Turnaround breakthroughs Next Generation business design
29
29 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com The Tale of Two Economies
30
30 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Four-Chain World
31
31 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com The Four-Chain World Technology Media/Content/Advertising Telco Consumer Electronics
32
32 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com The Four-Chain World Consumer Jennifer Stone: 50-year-old, Small Business Owner
33
33 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com The Four-Chain World Consumer Jennifer Stone: 50-year-old, Small Business Owner
34
34 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Bloomberg: Simplifying the Trader’s Hassle Map Easy to manipulate: access and downloading Sleek dual- screen terminal Single comprehensive platform With Bloomberg: Data comparison/ download problems Incomplete information Many screens and computers A la carte pricing Multiple logins Multiple connections/ subscriptions Without Bloomberg: It takes time and is expensive to connect to up to 200 exchanges, communicate with thousands of brokers, subscribe to countless news and research sources, and hook up voice communication Accessing each exchange and each news source takes time, and I need data that is current up-to-the-second It’s hard to keep track of what everyone charges, and it’s expensive to buy data access and services a la carte To see all of the data at once I need to have a bunch of computers and screens at my desk. Best alternative is to toggle between windows, which takes time No matter how much research I do or how many people I talk to, I’m never sure if I have as good and as current market information as our competitors do Some data pricing information is not comparable across sources and not all of the data I have can be easily downloaded into Excel for additional analysis
35
35 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Hassle Map
36
36 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com A Far Better Deal for the Customer
37
37 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com High growth Premium price Stronger allegiance
38
38 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Value Migration 2001 Value2009 Value $2.0 trillion$1.5 trillion Note: Bloomberg numbers are estimates since company financial data is not released. 21 Leaders $24 billion$503 billion7 cross-chain players 2%25%Share of value
39
39 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Turnaround Focus Mindset Energy
40
40 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Turnaround successes Apple Autodesk Best Buy Burberry Colgate Continental AG Eastman Kodak Fiat Ford Harrah’s Hewlett Packard Hyundai IBM Kellogg's LG Mobile Morrisons Nissan Porsche Samsung Volkswagen Xerox
41
41 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Can you reverse a no-profit zone?
42
42 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Value Added Price In the Same WayDifferently Compete Compete On
43
43 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com ROIC vs. Growth for Top U.K. Grocers, 2005-2008 ROIC (%) Growth (%) Tesco Sainsbury’s Morrisons Sources: Morrisons 2009 Annual Report; Tesco 2009 5-year record; Sainsbury 5 year record; Compustat Global Vantage
44
44 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Customer Perception Map North American grocery retailers Excellent HighLow Poor Price Offer Perception
45
45 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com
46
46 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com TWO No-Profit Zones Memory chips Consumer electronics
47
47 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Sony vs. Samsung Sony $BB
48
48 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Sony vs. Samsung Sony $BB
49
49 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Sony vs. Samsung Sony $BB
50
50 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Sony vs. Samsung Samsung Sony $BB
51
51 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Ford stock price: 2007 to 2010 Source: Yahoo! Finance. Price Date 2007200820092010
52
52 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Value chain profitability EBIT Source: Annual Reports, Compustat, Analyst Reports. Note: Operating margin on net value added revenue. Auto Mfg. Tier 1New Car Sales Used Car Sales Fin. Leasing Ext. Warr. Ins. Parts Mfg. Add-On Prdct. Mfg. Take-Care Prdct. Mfg. Parts Ret. Svcs. & Repair Energy Rental Fleet Mgmt.* Veh. Utility
53
53 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com How much to collaborate? How much to improve the customer experience? How much turnaround energy to tap? How quickly can I evolve my business design?
54
54 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com My business design Customer Selection Profit Model Strategic Control TodayNext Scope Unique Value Proposition
55
55 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Which would you prefer? Business Design “A” $10 billion $50 million Business Design “B” $8 billion $300 million Revenue Profit
56
56 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Value Added Price In the Same WayDifferently Compete Compete On
57
57 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Vision of Next Decade? Capacity Compete/Collaborate Ratio Creative Business Design –Compare: To other companies Today vs. 5 years ago Hassle map Revisit value chain Resource-sharing
58
58 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Value Added Price In the Same WayDifferently Compete Compete On
59
59 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Creative Business Design
60
60 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com The Customers’ Total Economic Equation “Big Box” Systems economics Product “Little Box”
61
61 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com My Little Box/Big Box What more should I sell? What economic problems should I solve? My Product
62
62 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Demand Matrix – Benefits and Buyers Purchasing Agent Product Functionality Cut Costs Cut Capital Reduce Errors Cut Cycles Greater Differentiation More Sales EngineerPlant Manager Business Manager Function Head C-level Executive Viewing the customer through an economic lens
63
63 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com My Product “Big Box” Consumer “Big Box” “Little Box” Convenience Reduced Uncertainty Plannability Excellent Experience Information Great Service Time Savings Reduced Hassle More Options Faster Response Easier on Budget Peace of Mind Personalization Affinity Health/Wellness
64
64 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Using hidden assets to create new value for customers DoorsInstrument Panels InteriorsElectronics Integration Design Engineering R&D Testing Market Research Seats Manufacturing Market position: Johnson Controls
65
65 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com DoorsInstrument Panels InteriorsElectronics Integration Design Engineering R&D Testing Market Research Seats Manufacturing Using hidden assets to create new value for customers 3% 15% Market position: Johnson Controls
66
66 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Johnson Controls: Financial performance Source: Compustat. CAGR: 14%CAGR: 10% $BB Revenues 1991-2005 Market Value 1991-2005 $MM Operating Income 1991-2005 $BB 0 4 8 12 16 1991199620012006 CAGR: 18%
67
67 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Johnson Controls: Market value vs. components suppliers Johnson Controls Average of Components Manufacturers 1 Indexed Market Value (1995=100) Indexed Market Value Source: Compustat., Data are for January of the year indicated. 1 Arithmetic average of the following companies: Intermet, Superior Industries, Modine Mfg, Tomkins PLC, Dana Corp, Eaton Corp.
68
68 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com JCI Customer selection Purchasing agent Senior managers Value proposition Low-cost components High quality Lower fixed cost –Design staff –Capital equipment Lower inventory Lower system cost Faster response Profit model Gross margin Multi-year/program contract Scope Parts Systems Strategic control None Senior management relationship/information flow Comfort Labs –Proprietary information Organization structure “Manufacturer” “Solutions provider”
69
69 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Air Liquide: Putting hidden assets to work (1991 to 2001) HazMat expertise Process/energy expertise Gas production expertise Hidden Assets Leveraged: 1 For Semiconductor Fabs only, following acquisition of TI’s chemical operations. Raw Material Cost & Supply Supply Chain Effectiveness Energy Costs Production Costs & Asset Maintenance Safety & Environmental Risk Reduction Supply of Gas raw materials IT systems: Tracking/Supply Chain, Remote Monitoring, … Energy efficiency & on-site waste-gas electricity generation Management of other production processes Management of all Gas (& Chemical) production processes Management of on-site Gas raw material distribution
70
70 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Air Liquide’s services strategy helped fuel strong growth Year Three-year rolling annual growth rate Revenues Operating Profit
71
71 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Tetra Pak
72
72 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Refrigeration Logistics Handling Storage
73
73 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com 800 design and development specialists 3,000 food processing and packaging experts (engineers, microbiologists, etc.) Living with the customer
74
74 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Tetra Pak: “Life Cycle Partnership” means long-term customer relationships Employing more than 3,000 food processing and packaging experts, Tetra Pak helps reduce costs along the entire value chain from manufacturing to retail Determine food packaging and performance objectives: –Product quality –Liters of output per hour –Sustainability targets Select machinery and packaging Provide equipment financing Management training –15 “Train the Trainer” centers Increase employee productivity with professional development to maximize availability of equipment –Human error accounts for most equipment failure Determine distribution requirements : –Shipping frequency and method –Wholesale and retail shelf space –Weight constraints Test machinery and factory process flow Quality testing with distributors Hone product quality On-site operational and maintenance training Optimize parts inventory management –4 distribution centers for parts Optimize QC: Who does what to what equipment, when and how –Access to 65 tech service centers Periodic factory review to avoid “if it ain’t broke, don’t fix it”- mentality Source: http://www.fao.org/ag/AGS/publications/docs/AGST_WorkingDocuments/J7193_e.pdf Wholesale and retail distribution process flow Equipment maintenance and parts Operational fine-tuning & process flow Installation & start-up Equipment selection & financing Supply chain analysis Channel selection Operational trainingStart-up training Equipment upgrades & process flow improvements Periodically obtain feedback from wholesaler and retailers Incorporate feedback into next iteration of food processing and packaging design Food and Beverage Manufacturing: Tetra Pak’s “Life Cycle Partnership” One Tetra Pak key account manager for each customer Tetra Pak key activities E.g. Dairy Manufacturer
75
75 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Project Risk
76
76 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com “Delusions of Success” – Harvard Business Review, July 2003
77
77 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com New products (food)78% New products (Rx)96% M&A60%+ IT projects76% VC/new business projects80% Project risk: Failure rates
78
78 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com
79
79 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Overinvest Business design
80
80 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com 5% “20 moves" to raise the odds” 90%
81
81 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com The Checklist Manifesto, by Atul Gawande Chapter 3
82
82 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com “Hybrid” business designs HondaToyota Customer selection Moderate income High income Unique value proposition Energy efficiency Drive, style, electronics Profit model Lower-margin cars High-margin cars Strategic control Patents Brand evolution Patents
83
83 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com “Hybrid” business design comparison Source: BusinessWeek. *Compared to four-cylinder Camry. Days to sell Estimated annual sales Premium over regular model Toyota Prius Lexus RX 400h Toyota Highlander 81016 105,00022,00020,000 $1,150*$11,110$6,590 Honda Civic 36 28,000 $2,790 Honda Accord 56 20,000 $3,290 10 147 $5K 45 48 $3K
84
84 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com The Toyota Way (Chapter 6) – Jeffrey Liker
85
85 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com What are three different business designs for each new growth initiative?
86
86 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com 000s Number of OnStar subscribers ’99 Revenue: $43MM Source: Literature Searches, Harvard Business School Case N9-602-082.
87
87 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com OnStar Business Design Customer selection Luxury All GM drivers GM and others Value proposition “Accessory” Safety/security Remote diagnostics Safety security Remote diagnostic Information, entertainment Growing suite of applications Profit model Sell more cars Subscription Maximum volume Service tiers Strategic control ? Cost position/ installed base De facto standard Brand Go-to-market Dealer install Factory install Factory install, GM, and other OEMs IIIIII
88
88 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com 000s Number of OnStar subscribers ’02 Revenue: $1BB Source: Literature Searches, Harvard Business School Case N9-602-082. ’99 Revenue: $43MM
89
89 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Tale of Two Economies
90
90 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Stagnation Risk
91
91 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Mystery of Demand
92
92 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Building from the customer up The messy ambiguity of the market place Demand: How does it happen? Why does it not? How does it change? Why does it always surprise us? Scope Strategic Control Profit Model Unique Value Proposition Customer Selection The messy ambiguity of the market place
93
93 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com The Underneath-the-Surface World of Dali and Bosch
94
94 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com
95
95 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com
96
96 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com
97
97 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com
98
98 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com
99
99 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com
100
100 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com
101
101 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com
102
102 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com
103
103 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com
104
104 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Proceed with Caution
105
105 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com What separates the winners iPod vs. Zune Kindle vs. Nook Zipcar vs. Hertz Nespresso vs. Lavazza from the rest?
106
106 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com What separates the winnersfrom the rest? Netflix vs. Blockbuster Salesforce vs. Oracle Eurostar vs. Air FrancePrius vs. Honda Civic
107
107 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com 76M How does this happen? Zune vs. iPodNook vs. KindleBlockbuster vs. NetflixHertz vs. Zipcar Air France vs. EurostarLavazza vs. NespressoHonda Civic vs. PriusOracle vs. Salesforce
108
108 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Masters of the Demand Equation Nespresso Eurostar Netflix Tetra Pak Zipcar Growing Power Wegman’s FactSet Dassault Systems Kindle by Amazon Bang & Olufsen OnStar by GM Apple Capital One CareMore (Health) Salesforce.com Bloomberg Pret A Manger Facebook Capital IQ Virgin Atlantic
109
109 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com The Demand Equation How magnetic? Response rate drivers Behind the screen: Are all pieces in place? How fast are we getting better? How many different types ?
110
110 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com The Demand Equation: Rating all the components Inert No Don’t knowMaximize Irresistible Yes FlatSteep OneMany 12345678910
111
111 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Magnetic? 12345678910 Quality Magnetic What’s my score? BA BA
112
112 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Emotional connection Many of these winners, despite a very functional positioning, achieve a degree of emotional connection with their customers “I love this store” 2010 CPM survey responses Percentage of responses Strongly disagree Disagree Neutral Agree Strongly agree
113
113 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com M = F X E
114
114 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Subconscious Conscious FunctionalEmotional X
115
115 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Not first mover, but … First to create and capture the emotional space.
116
116 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Biggest Mistake #1 Stopping before we get to magnetic
117
117 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Behind the screen: Examples Infrastructure Ecosystem Deals Organization Demand Leverage
118
118 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Demand Leverage Windows Software Writers Amazon Customer Recommendations Netflix Customer Reviews Netflix Coupon in DVD player boxes iPhone App Developers Facebook App Developers Music Industry Supporting iTunes User data in GMail Articles about Zipcar Articles about Starbucks (first 5 years) Articles about Pret a Manger Nespresso in First Class $5 billion? $80 million? $30 million? $75 million? $1.3 billion $100 million? $570 million $500 million? $30 million? $50 million? $75 million? $10 million?
119
119 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Demand Leverage: How do we engage others in our demand process? Software developers App developers Customer review writers User-provided preference data Media Coverage
120
120 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Biggest Mistake #2 Assuming magnetic is enough
121
121 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com When was the last time I bought something I really loved? When did I first want to? When did I actually buy it? What triggered me to do it? Purchase I LovedGap (weeks, months)Trigger 1. 2. 3.
122
122 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Triggers 6:1Machine demo plus serve the coffee (Nespresso) 10% 22%Local processing center (Netflix) 10%Recommendation algorithm improvement (Netflix) 15 5 3% to 10%(Zipcar) 20%Parking and killer offer (Symphony) 25%Trial (Apple) 50%Word of mouth (Nespresso)
123
123 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Hassle map Fight with spouse – what movie to see – “you decide” Search and search Go to store Pick three Go home Fight again – pick one Forget to return WatchReturn five days later, pay late fee, get mad Get online; construct queue; get recommen- dations WatchReceive films in mail Put in mailbox to return Automatically receive next film in queue
124
124 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Post OfficeProcessing CenterCustomer Convenient No damage Brand Bland, or Deep imprint
125
125 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Non-Obvious Response Rate Drivers?
126
126 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Word of mouth 99.9 percent Recommendation engine Processing centers (4 1)
127
127 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Netflix: Response rate drivers Processing center
128
128 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com
129
129 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com When you’ve won, you can: a) Coast b) Keep it dynamic
130
130 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Dynamic “Get better fast” Meaningful variation You take an idea, and develop it to its full potential
131
131 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Netflix responded immediately: they dropped price and raised their number of titles Titles Titles: Blockbuster Online versus Netflix 2002-2008 Blockbuster Netflix
132
132 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Netflix Demand Equation Inert No Don’t know Irresistible Yes FlatSteep OneMany 12345678910 Maximize
133
133 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Eurostar’s Hassle Map Air 50 minutes 55€ 40 minutes (check-in, security, walk a mile) WWF act with the bags Heathrow: 30 minutes at Customs Heathrow London: –40 minutes –55£ Eurostar 10 minutes 10€ 10 minutes (check-in, customs, security) Lots of room at end of car Done in advance St. Pancras to London –10 minutes –10£ Extra 160 minutes Extra $150 Extra 20 minutes Extra $30
134
134 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Eurostar’s Hassle Map AirEurostar
135
135 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com De-Averaging the Customer Premiere First £196 one-way Lounge, Meal, Champagne, 10-min Check-in, Ticket convertible to air Standard £99 one-way Fast & Cheap Business First £175 one-way Business lounge, Fast meal, 10-min check-in, taxi to/from station Economy Plus 110£ one-way Quiet cars, Frequent traveler points Note: Fares based on a single ticket for one-way service from London to Paris on December 10, 1997 Source: Eurostar, http://web.archive.org/web/19971210175921/http://www.eurostar.com/, access 08/13/2010
136
136 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Source: Ridership based on multiple news reports; investment amounts are approximate. Note: (*) Brussels line only. Changes in average ridership were estimated by finding average ridership in the pre-improvement interval and comparing this with ridership in the post-improvement interval. Since customer de-averaging was introduced in 9/1996, the 1996-1997 period has been adjusted accordingly. In addition, the years 2001-2002 were excluded from estimates of the 1998-2003 interval due to the fall off in travel stemming from 9/11 and the business cycle downturn. Major Improvements Changes in Average Ridership (in millions of passengers) Customers De-Averaged Low cost +0 Minutes +52% Belgium High Speed rail £1.1B cost +30 Minutes* +19% First part of ‘High Speed 1’ £1.7B cost +20 Minutes +21% Second part of ‘High Speed 1’ £1.7B cost +20 Minutes +17% Pre Post 1996-19971997-19982003-20042006-2007
137
137 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Richard Brown, Eurostar CEO, 2002-2010 Under Brown’s leadership, Eurostar ridership grew 33 percent and market share increased 15 percentage points. "My instinct is to talk to customers – what they want, what more can we do. I'm not sure everyone does this.” Source: Derbyshire Life (12 March 2010), Business Travel World (October 2007)
138
138 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Millions of Passengers Source: http://www.anna.aero/2009/07/31/100-years-of-cross-channel-air-travel/UK CAA Eurostar has grown the market and increased market share Eurostar and airline passengers (London to Paris by year) 38%63%65%77% Eurostar Market Share: Airlines Eurostar
139
139 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Eurostar’s Demand Equation Inert No Don’t know Irresistible Yes FlatSteep OneMany 12345678910 Maximize
140
140 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Two Endings
141
141 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com “War is a series of catastrophes – resulting in victory.” – Georges Clemenceau “… for a little while.” – Adrian Slywotzky
142
142 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Can Giants Innovate? Nespresso Playstation OnStar Prius Lexus Kindle IBM PC xBox iPod Hulu NTT DoCoMo i-mode Dassault Systèmes Swiffer White Strips Sam’s Club Dayton Hudson/Target ING Direct Droid HP Printer Bloomberg Media Aldi/Trader Joe’s Tesco Financial Services
143
143 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Strategic risks and countermeasures Extreme riskCountermeasures Brand Golden Triangle Technology shift Double bet Change the oddsProject risk Customer shift Proprietary information Industry economic squeeze Compete/collaborate ratio Stagnation risk Little box/big box Unique competitor Change the game
144
144 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Technology Shift
145
145 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Technology risk Market Capitalization ($B) Lucent Jan 98 Jan 99 Jan 00 Jan 01 Jan 02 Jan 03 Jan 04 Jan 98 Jan 99 Jan 00 Jan 01 Jan 02 Jan 03 Jan 04 Xerox KodakPolaroid Jan 98 Jan 99 Jan 00 Jan 01 Jan 02 Jan 03 Jan 04 Jan 98 Jan 99 Jan 00 Jan 01 Jan 02 Jan 03 Jan 04
146
146 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com
147
147 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Technology risk: Barnes and Noble $ billions Amazon B&N.com Source: Compustat; annual reports. B&N.com vs. Amazon (Net sales, media only) Barnes & Noble vs. Amazon (Market cap, June 2007)
148
148 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Double betting IBM Intel Microsoft Motorola Nokia Barnes & Noble Blockbuster Kodak DidDid Not
149
149 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com “When you come to a fork in the road, take it.” – Yogi Berra
150
150 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Brand Risk
151
151 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Ford Brand Value Source: Interbrand. $BB
152
152 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Sony Brand Value Source: Interbrand. $BB
153
153 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Samsung Brand Value Source: Interbrand. $BB
154
154 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com
155
155 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com The Golden Triangle Product Brand Business Design
156
156 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Customer Shift
157
157 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Coach No. of interviews Batch to continuous Proprietary customer information
158
158 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com Proprietary information Capital One Tsutaya Coach Harrah’s JCI
159
159 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com “What do we know about customers that others don’t?”
160
160 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com “Risk is just an expensive substitute for information”
161
161 AJS-20101027-CIRT, Santa Fe.ppt © Oliver Wyman www.oliverwyman.com
Similar presentations
© 2024 SlidePlayer.com Inc.
All rights reserved.